Can this be done?

Discussion in 'Property Market Economics' started by Brisbane04, 22nd Mar, 2020.

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  1. Brisbane04

    Brisbane04 Well-Known Member

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    Hi I’ve asked this before. I currently own my own home and have 4 investment properties. With the discrepancy between Owner Occupied and investor rates I wonder if the following scenario would be possible. Could I take out an Owner Occupied Loan over my own property and use the funds to pay out some of my investment properties? I would quarantine the amounts and keep a record for the accountant to claim the interest component of the loan for tax purposes. I would have thought it wouldn’t have mattered how the money was borrowed (legally of course) as long as you showed the paper trail. Thoughts people???
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    If the purpose is for paying off investment loans the new lending secured by your owner occ would be classed as investment and therefore have investment interest rates applied, so depends how you sell it to the bank, most wan to know the purpose of funds, few don't.
    My understanding of the tax deductiblity is that yes they will be deductible as the purpose is investment however please seek your own specific tax advice.
     
    Last edited: 22nd Mar, 2020
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Yes it could be done and could be done with the tax deductibility maintained. I have a private ruling on this for a client.

    Strategy: Borrow Against the Main Residence for an Investment Loan (Shuffling Loans Around) Strategy: Borrow Against the Main Residence for an Investment Loan
     
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  4. Brisbane04

    Brisbane04 Well-Known Member

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    Thanks very much Terry
     
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  5. Wattle

    Wattle Active Member

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    If you told the bank the full story, they wouldn’t give you the lower rate as loan purpose would be investor loan. No doubt not all banks will comply with APRA rules on this and you could probably get away with it, but this goes against latest reporting requirements implemented.
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    This is done after settlement and there doesn't appear to be a need to tell in most cases.
     
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  7. Ian87

    Ian87 Well-Known Member

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    Always the man that comes up with the goods.
     
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